Ignoring the reality that past history does not equal future results, I don't see a disconnect from the three graphs shown; just the bottom graph showing a later period in the cycle. The stock drop has followed the drop in whatever the macro is.

Look at the left hand axis, its the nominal value of the S&P 500. The right hand axis is the change in the OECD's leading economic indicator statistic for the US. Yea, it had a crazy convergence in 2011, but guess what happened in 2012? It didn't. Dan Ivandjiiski is an absolute boss at cherry picking information to get the fear mongering going, he also got busted for insider trading back in the 90's which is why he has a lot of time to cherry pick.

This isn't anything new, we have the largest divergence between economics and markets, from my belief but I need to confirm, in the history of the world. Kind of what happens whenever the largest players in the market have a hypothetically unlimited bank account. It's a game of musical chairs right now, and the hope is that the conductor can play just long enough to add some chairs back to the circle before the music stops. The question is do we have more chairs to add or not, even though these charts suck my belief is more to the latter. That being said, we've thought that for a long time. Doesn't mean you still can't get positive investment returns. The best market environment is when some are scared and some aren't. When everyone is euphoric or scared bad things happen.

quote:This isn't anything new, we have the largest divergence between economics and markets, from my belief but I need to confirm, in the history of the world. Kind of what happens whenever the largest players in the market have a hypothetically unlimited bank account. It's a game of musical chairs right now, and the hope is that the conductor can play just long enough to add some chairs back to the circle before the music stops. The question is do we have more chairs to add or not, even though these charts suck my belief is more to the latter. That being said, we've thought that for a long time. Doesn't mean you still can't get positive investment returns. The best market environment is when some are scared and some aren't. When everyone is euphoric or scared bad things happen.

Fascinating read.

That being the case, do you think it's crazy that gold bugs and bitcoiners are making the noise they are making these days?

I'm not a gold bug, but I understand what they are saying and don't understand the ridicule they get.

Sure a long term reinvesting plan has killed gold returns over the last 70 years.

But that's not the point of gold in today's environment. It has a purpose and that purpose may be more important today than it was 20, 50, 70 years ago.

quote:But that's not the point of gold in today's environment. It has a purpose and that purpose may be more important today than it was 20, 50, 70 years ago.

I'm assuming you mean as an inflation indicator against all currencies. I'd argue that correlation is broken but I could go a long while about that.

This is the data point that I always like pointing to when people say "the Fed's causing so much inflation". Since the start of 2008, the dollar index (DXY) has appreciated 7.3%. Since the beginning of QE1 when the Fed first started puchasing mortgages on a mass scale the dollar index has depreciated 3.3%, however that data point must also be kept in context as the dollar appreciated like crazy post Lehman. So adjusting parameters, since right before Lehman collapsed to the close yesterday, the dollar has appreciated 4.2%.

Everyone for some reason thinks that Bernanke is just inflating the dollar to worthless paper when in reality his inflation record has been the best of any Fed president. Everyone needs to keep in mind everything is relative. If you're at a bar and you want to pick up a girl, its not THAT important that you are handsome and charming, you just have to be more handsome and charming than all the other guys in the bar. That is the same scneario with the dollar right now.